Short Reads

Dutch Supreme Court confirms the availability of a passing-on defence in antitrust damages litigation

Dutch Supreme Court confirms the availability of a passing-on defence

Dutch Supreme Court confirms the availability of a passing-on defence in antitrust damages litigation

18.07.2016 NL law

Dutch Supreme Court confirms the availability of a passing-on defence in antitrust damages litigation

On 8 July 2016, the Dutch Supreme Court handed down a judgment concerning an ongoing discussion in antitrust damages litigation: the availability of a “passing-on” defence (ECLI:NL:HR:2016:1483). Dutch courts have taken varying approaches in determining whether an infringer can invoke as a defence against a claim for damages the fact that the claimant was able to raise the downstream prices to its customers and thus “passed-on” all or part of the alleged overcharge resulting from the infringement of competition law. In its judgment, the Supreme Court confirms that passing on is a valid defence under Dutch law and gives further guidelines on the application of this defence.

The case concerns a civil claim by TenneT against ABB, following on from the European Commission’s 2007 infringement decision in which ABB was fined for its participation in the Gas Insulated Switchgear cartel. TenneT claims that as a result of the infringement it paid an overcharge for the GIS-installation it purchased from ABB in 1998. ABB argues that TenneT did not suffer any loss because it passed on the costs of the GIS-installation to its customers.

ABB’s passing-on defence was rejected by the District Court for the Eastern Netherlands in January 2013 (ECLI:NL:RBONE:2013:BZ0403). According to the District Court, the passing-on defence should be viewed as a specific application of the doctrine of voordeelstoerekening (cf. in German: “Vorteilsausgleichung“). Under this doctrine, the defendant may offset a benefit that was conferred to the claimant against the damages owed for that same wrongdoing, provided there is an adequate causal link between the wrongdoing and the benefit and provided that taking account of the benefit is reasonable (Article 6:100 Dutch Civil Code). According to the District Court, it would not be reasonable to allow ABB to rely on the passing-on defence, as ABB might escape liability as a result.

ABB successfully appealed this judgment. In September 2014, the Court of Appeal of Arnhem-Leeuwarden ruled that ABB could invoke a passing-on defence and concluded that TenneT’s claim (to be determined in a separate stage of proceedings) reasonably comprised the overcharge minus any part of the overcharge that it passed on to its customers (ECLI:NL:GHARL:2014:6766). Unlike the District Court, the Court of Appeal regarded passing-on as an issue that directly affects the level of the damages that can be awarded to a claimant. By passing the alleged overcharge on to his own customers, the claimant effectively reduces the loss he suffers. The Court of Appeal acknowledged that if indirect customers do not sue ABB for any overcharges that were passed on to them, ABB might escape liability for some of the loss it caused. However, according to the Court of Appeal that is not a concern of Dutch tort law, which is compensatory in nature.

TenneT then filed an appeal with the Dutch Supreme Court. According to TenneT, the passing-on defence should be assessed under the doctrine of voordeelstoerekening. Given the strict interpretation of that doctrine’s requirement of a causal link between the wrongdoing and the benefit conferred onto the claimant in the case law of the Supreme Court, this would likely leave little room for the passing-on defence. Furthermore, as was evidenced by the District Court’s earlier decision, the requirement of reasonableness could also stand in the way of a successful reliance on the passing-on defence.

In its judgment, the Supreme Court rules that as a matter of Dutch law, the passing-on defence is available. In this context, the Court refers to the EU Antitrust Damages Directive, which states that Member States must ensure that the defendant in an action for damages can invoke a passing-on defence. The legislative proposal to enact this Directive in the Netherlands was submitted to the House of Representatives on 7 June 2016 (See our blog Update on changes in antitrust damages claims legislation in the Netherlands).

Surprisingly, the Supreme Court goes on to say that the courts are free to choose how they qualify the passing-on defence. According to the Supreme Court, the approaches taken by the District Court and by the Court of Appeal should have led to substantially the same result. Either way, the benefit that is conferred onto the claimant in connection with the infringement will be taken into account in the determination of the damages, provided that it is reasonable to do so. And in both approaches, the court can put the burden of proving pass-through on the defendant.

In this context, the Supreme Court states that if its earlier case law suggested that the doctrine of voordeelstoerekening required a very direct causal link between the wrongdoing and the benefit conferred onto the claimant – which it clearly did – that case law no longer represents good law. In this respect, the Supreme Court ruling is to be regarded as a landmark decision, with implications that potentially reach far beyond the area of antitrust damage claims.

Related news

17.07.2019 BE law
EU Single-Use Plastics Directive is now in force: brief recap

Articles - Plastic is a significant and growing global concern. A recent study commissioned by WWF and carried out by the University of Newcastle, Australia, suggests that people are consuming around 2,000 tiny pieces of plastic every week (which is approximately 5 grams of plastic, the weight of a credit card).  In this context, the EU adopted a new directive aiming at tackling marine litter generated from 10 single-use plastic products and from abandoned fishing gear and oxo-degradable plastics. This is called the Single-Use Plastics Directive and has entered into force this month, on 2 July 2019.

Read more

15.07.2019 EU law
ICO to impose record-breaking fines for inadequate security measures and data breaches

Short Reads - Though the European data protection authorities have taken their time in enforcing the GDPR, two announcements by the ICO in the UK regarding proposed fines for British Airways and Marriott demonstrate that large fines are about to start landing regularly. Both of the substantial fines are to be handed out as a result of shortcomings in handling data breaches caused by cyber-attacks.

Read more

04.07.2019 BE law
Higher fines ahead under Belgium's new competition act

Short Reads - Companies beware: on 3 June 2019, a new competition act entered into force in Belgium. The new act introduces a number of modifications to procedure and sanctions, aimed at improving enforcement of competition laws as well as the functioning of competition authorities.

Read more

04.07.2019 NL law
Audit firms and accountant's duty of care towards third parties

Short Reads - The Dutch Supreme Court recently decided (ECLI:NL:HR:2019:744) that the standard for audit firms' and accountants' duty of care towards third parties is in essence no different than the general duty of care under Dutch tort law, and ultimately depends on the circumstances of the case. However, the role of accountants in society, their responsibility to serve the general interest, and rules of professional conduct and practice play an important role.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring